For investors intrigued by Bitcoin but wary of its notorious volatility, a new wave of exchange-traded funds (ETFs) is offering a smarter, more structured approach to crypto exposure. First Trust Advisors, in collaboration with Vest Financial, has launched two innovative ETFs: the FT Vest Bitcoin Strategy Floor15 ETF (BFAP) and the FT Vest Bitcoin Strategy & Target Income ETF (DFII). These funds are part of the expanding Target Outcome ETF category, designed to balance opportunity and risk in unpredictable markets.
Unlike traditional Bitcoin ETFs that mirror price movements—both up and down—these new offerings introduce strategic guardrails. They aim to capture meaningful upside while limiting potential losses, making them ideal for cautious investors who don’t want to miss out on crypto’s growth story.
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How BFAP Delivers Controlled Bitcoin Exposure
The FT Vest Bitcoin Strategy Floor15 ETF (BFAP) is engineered to provide exposure to Bitcoin’s performance without exposing investors to its full downside risk. It tracks the Cboe Bitcoin U.S. ETF Index, using a blend of exchange-traded options (including FLEX Options) and over-the-counter derivatives to replicate Bitcoin’s returns.
What sets BFAP apart is its dual mechanism: a performance cap and a loss floor. As of April 4, the upside potential is capped at 34.51% (before fees), while the maximum drawdown is limited to 15% over a roughly 12-month period. This structure allows investors to benefit from moderate to strong upward movements in Bitcoin’s price while protecting capital during sharp corrections.
Ryan Issakainen, Senior VP and ETF Strategist at First Trust, explains:
“Over the past few years, investors have shown a remarkably strong appetite for Bitcoin-linked ETFs, but the potential for sharp drawdowns has kept many on the sidelines. We believe BFAP will be a useful tool for those seeking to participate in a meaningful portion of Bitcoin's potential upside while also addressing downside risk.”
This makes BFAP particularly appealing for risk-averse individuals, such as retirees or conservative portfolio managers, who want crypto exposure without sleepless nights.
It’s important to note that BFAP does not directly hold Bitcoin. Instead, it uses financial instruments whose values are linked to Bitcoin’s price—ensuring compliance with regulatory standards while still delivering market-aligned returns.
A Smarter Path to Crypto Participation
Jeff Chang, President of Vest Financial, describes the fund as “a more controlled way to engage with Bitcoin.” By defining both the floor and the cap upfront, investors gain transparency and predictability—rare qualities in the crypto space.
This structured approach aligns with growing investor demand for products that offer asymmetric risk-reward profiles: limited downside with meaningful upside. In volatile markets, such frameworks can enhance long-term portfolio resilience.
The fund’s net expense ratio of 90 basis points (0.90%) is competitive given its sophisticated options-based strategy. While higher than plain-vanilla index ETFs, it reflects the active management and derivative complexity involved.
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DFII: Targeting Income in a Volatile Market
While BFAP focuses on capital preservation with growth potential, the FT Vest Bitcoin Strategy & Target Income ETF (DFII) takes a different angle: income generation.
DFII aims to deliver a targeted annual distribution rate of 15%, primarily by selling options on Bitcoin-linked instruments. This strategy capitalizes on market volatility—a consistent feature of crypto markets—by collecting premiums from option writing.
For income-focused investors, DFII presents a novel opportunity: earning steady returns from a high-growth asset class without relying solely on price appreciation. The trade-off? Limited upside participation, as gains are partially sacrificed to fund the distributions.
Still, in an environment where traditional yield sources like bonds offer modest returns, a 15% target—though not guaranteed—is compelling. It reflects Vest Financial’s broader mission: bringing outcome-based discipline to speculative asset classes.
Core Keywords Driving Investor Interest
This new generation of ETFs taps into several high-intent search themes:
- Bitcoin ETF with downside protection
- Low-volatility crypto investment
- Target outcome ETFs
- Income-generating crypto ETF
- Bitcoin floor and cap strategy
- Regulated Bitcoin exposure
- Options-based crypto fund
These keywords reflect real investor concerns: safety, predictability, yield, and regulatory compliance. By naturally integrating these concepts throughout their design and messaging, BFAP and DFII align closely with current search behavior and investment intent.
Frequently Asked Questions
Q: How does BFAP limit losses to 15%?
A: BFAP uses a dynamic options strategy that establishes a defined loss floor over a one-year period. If Bitcoin’s price drops sharply, the fund’s derivative positions help offset losses beyond the 15% threshold.
Q: Does BFAP hold actual Bitcoin?
A: No. The fund does not own Bitcoin directly. Instead, it uses financial derivatives tied to the Cboe Bitcoin U.S. ETF Index to replicate performance while staying within regulatory boundaries.
Q: Is the 15% income from DFII guaranteed?
A: No. The 15% is a target distribution rate based on current market conditions and option premium income. Actual returns may vary depending on volatility and market performance.
Q: Are these ETFs suitable for long-term investing?
A: Yes, especially for investors seeking structured exposure. However, due to periodic rebalancing and reset cycles, performance should be evaluated over full outcome periods (typically 12 months).
Q: How often do the caps and floors reset?
A: The outcome parameters reset approximately every year, aligning with the fund’s outcome period. Investors should monitor these resets as they affect potential returns.
Q: What risks remain despite the safety features?
A: While downside is capped, investors still face risks such as underperformance in strong bull markets (due to caps), fee erosion, counterparty risk in derivatives, and changes in regulatory policy.
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The Future of Outcome-Based Crypto Investing
BFAP and DFII represent a shift toward intentional investing—where outcomes are designed, not left to chance. As digital assets mature, demand for regulated, transparent, and risk-managed products will only grow.
These ETFs don’t eliminate volatility; they manage it. They don’t promise outsized gains; they offer participation with boundaries. And for many investors, that balance is exactly what they’ve been waiting for.
As the crypto ecosystem evolves, expect more innovation at the intersection of traditional finance and digital assets—products that don’t just mirror markets but shape exposure intelligently.
Whether you're building a diversified portfolio or exploring crypto for the first time, structured ETFs like BFAP and DFII offer a compelling middle ground: exposure without exposure, growth with guardrails, and opportunity with peace of mind.